*

From Central

Planning

Dept.

To

MR. J.A.

JAMESON

FOR

IN,FORMATION.

g3E O IL INDUSTRY IN.193

sTATE~I6AC REVI~

1,

WORLD PRORUGTION 195&

There was a record increase of some 70 million tons in World Production In 1951 despite the suspension of Persian supplies in June, equivalent to a loss of about 20 million tone in the year. This 10'8s was more then madeup by inoreased production in Kuwait and Saudi Arabia 80 that the Middle East as a whole'showed a rise of nearly 9 million tone. . '_

L
t

U.S. (incl. Rat. Gasoline) 285.2 324.6 Remainder N. America . . . . 13.9 17.3 Caribbean . . . . . . . . . . . 86.2 97.5 Remainder S. America .**A 6.3 JJESTERN HEMISPHERF TOTAL. 391.1 445.7 EASTERN HEMISPHERE Western Europe .,...*. Middle East ..,....... Far East ..,.,.* ,..,..

+ 13.G + 24.7$ + 13.1% + + 13.9$

6.0% pea. 17.1% ll 9.5% " &!a"

7&

pga8

2,o 87.1 11.6

2.5 95.9 13*9

+ 23.q + lO.l$ + 2o.G + 11.5% + 13.4% + 13.1% LLx&

25.0$ paa. 22.0% " fLi&" 24.9$ pa, 9.58 p.a* 11.1% p,a. %S pea-

. 100.7 112.3 WORLD. excl. U,S,S.R. etq. . 491.8 558.0 U.S.S.R. etq. (estimated) . .
WORLD=

43.6

49.3,
f&g&j

. . . . . . . . ...135,4

Aa a percentage increase this 13& rise in World Production in 1951 is the higheat recorded during any of the last twent -five years, with the exception of 1947/4S (when it ~08' 14&f. It should also be comparedwith the average rate of growth (a (b Since the war (1946/51) 9.7$ p.a. The last 25 yeare .,, 5.6$ p,a.

In North America, outside the U.S.A., which ia considered later, Mexican production increased only from 10.1 m.t.a. in 1950 to lo,8 m.t.a, in 1951, but Canadian production almost doubled fmm 3.6 n.t,a. to 6.5 m,t.a,, mainly owing to the full ~88' of the eastward outlet for Alberta crude by the inter-Provincial Pipeline.

. .

, Continukion

The Oil Industry in 1951

P?ge

Though the,loss of Persian cr,ude was nade up by increased production elsewhere in the Middle East, the Carlbbesn regained its place as second largest producing area in the World. Percentaae of World Production SuooJJed (excluding U.S.S.R. etc.)

U.S.A. Caribbean":: Middle East . Rest of World

2.

WoRIl)DEMAND 195O'&xcludinQ~'U*:&)

I/

It is not possible to break down World Demand with the sane accuracy as World Production since no detailed figures are, as yet, available, except for the U.S.A. Rroadly, however, consumption, as crude equivalent, may have been aa followa:\ 1451! XEiA iiAJ&wl

(nil. 317 62 63 52

tons) '343 T"2 68 '3% 13% 14% 30% *

U.S.A. ............... Rest of Western Hemisphere Western Europe ....... Rest of Eastern Henisphere

The dew for the Rest of'the Eastern Hemisphere is a tentative balancing figure and includes military supplies not included elsewhere,
i i

3.

TB ImoortsA%xoorts

in million

The official tons area-

Bureau of Mines data for 1950 and 1951 Products EaLzliJ w?a kw 'iizzil 44.5 44.1 u.diiQd 30.0 *em 23.5 -I

Imports m&s

***.. ...

25.0 4.5

25.2 &j

J-9.5 18.9 &Q&&J 9.5 -P 2.2 mmme

Net Imports.

20.5 21.3 =&mm= -we:

Contrasting 1950 and 1951, crude imports and exports hardly altered, pmducts imports declined very slightly, but products experts mse sharply on suspension of shipments fmm Abadan.

,*

rUo

..

dJEP#n:

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:

Continuation

The Oil Industry in 1951

Page

Net imports were therefore less in 1951 than in 1950, but with growing refinery capacity in Western.Europe and elsewhere the oal3. for product exports should diminish snd net imports therefore rise again in 19523 The Bureau of Mines' forecast is that net imports will reach 33 million tons in 1952.

The number of wildcats increased to 10,302' (1950 - 89554 wildcats) but tith a alight, though probably significant, de&no in the percentage of suocessful oil and gas . wells.
&rcentaae

of successful wildcat oil .

t 18.651

u!B 17.q

UQ 17.7$

UIA 17.3$

The total. number of wells drilled was 44,516 (1950 - 43,279 wells) with the average depth also increasing to 3,871 feet (1950 - ,9,6SO foet). There was a continuing trend to deeper drilling as shown by the number of wells drilled below 12,500. feet in the last three years, nsmely J$& 137; a, 157; J&&, 240. Piost succossN exploration has been in the Spraberry Trend of West Texas which is being compared in size with the East Texas Field. Proved Reserves of Crude Oi$ The estimates of Pmvod Reserves sgain increased by some 491 m,t. to,a figure of 3,650 m.t. The gain of Reeorvoa over the year's production of 303 m.t. was thus 188 m.t. Texas, at the end of 1951, held about 56%of the Proved Reserves of the U.S.A., having obtained 78$ of the increase in Proved Reserves over the year. U.S. Production 'Crude production increased bs 13.8$ to a new reoord of 303.5 m.t.a, over the previous annual record in 1948 of 272.4 m.t.a. . The Americans clsim that since 1949 and despite thEI . big growth in production, "reserve productive capaoity" haa,been maintained at around 55 million tons. This is the increase in production fmm existing wells at msqimumefficient rates which would be possible subject to conservation policies, adequate crude oil prices for marginal supplies and some completion of facilities.

* . .

\ Continuation

The Oil Industry in 1951

Page

The Forward Position anticipates The official Bureau of Mines forecast for 1952 increases in:+.g .

Domestio Supply - crude 3.3$, natural gasoline 6.3$, toi; Domestic Denand -

Increased exploration drilling activity throughout the U.S.A. is planned for 1952. The greatest effort will be in West Texas whero the popular objective will be fractured rosarvoirs similar to that of Sprabcrry, Greater attontion is c&o, however, now being paid to the @sins east of tho Bockioa. In these basins thicker sedimmtrr necossitato doopor drilling and the structuroa am loss obvious at surface than in the anticlinal areas which surround the basins and have hitherto clainod nost attention, Production was provod in tho Williston Basin of North Dakota in 1951 and Qasin play is a slogan which will bc increasingly popular in 1952.

Following tho op.rioe freesen applied at the end of 1950, the Office of Price Stabllisation has worked out and onforcod official coilinga which have virtually held prices for both Crud0 and Products in the U.S.A. at the leml ruling in Dooomber1950. ,

This ertificially imposed rigidity has rcnovcd ono of the nornal corrective forces against disequilibrium betwcon supply and donand, namely the nornal incentive which refinora havo, through prioc adjustints, to boost the yields of residuals and the ,niddlo distillate heating oils to root the seasonal incroaso in donand. Tho official ceiling for flxol oil on the East Coast nado it cheap in comparison with coal and so artificially stinulatod denand. Bowover, coastwiso tankor fmighte wore not fmscn and rose sharply above the lovol on which the official coiling had boon oalculatod, naking it conparativoly unocononio to sol1 boating oils in that iuportant rakot. But for a rolativoly nild wintor this night havo procipitatod a serious crisis, Auondnonts to tho official coiling had indeed to be nado in the case of Navy Special Fuel Oil ,in ordor to avoid disruption of supplies, In tho case of Aviation Gasoline the general ceiling was not raised but, to .oncourago production to offset the loss of Abadan output, l~spooicJ. disponsations~t had to bc nado to cover tho high cost of restarting or incmasing throughput in nargincl high cost plants and unocononic hauls ,to seaboard frou. So nuI38rous have.boon those napocial inland refinorios. dispensationsl that virtually all the narginal oxport dancnd has had in practice to bo covorod at a pmniun of the ordor of 4 cants pdr gallon ovor tha officicJ. published price of 16 conta.

Continuation

The Oil Industry in 1951

Page

4.

THE MIDDLEEASTPOSITIONIN 1951 Productlog

xm
Persia ............ Kuwait ,..,........ ............. Iraq ..*...* . . . . . ',, Qatar Neutral Zone ......
Saudi Arabia .....
. . . . l * i:; A . TmAL . . . .

lpfil
' 16.2 27.8 8,3 2.2 Nil 37.6
i::

zihdw6Q
- 49% + 64% +3oib + 37% + 4ti + 10%

(niLtons) 31.8 17.0 6.4 1.6 Nil 26.5

Bahrein
QYPt

.**...* ..,.*,....,.

87.1

95.9

Division

of Production according to shamholding

The distribution of production amongst tho Oil Companiesaccording to their shareholding interest nay be noted as follows, with the Gulbenkian share of tho 1.P.C. oil divldod equally amongst the other partners, The A.I.O.C. share includes Khanaqin production and Royalty oil fron Kirkuk, but excludes any crude fmnEgypt. Ea Total Oil 2 of Total A.I.O.C. p,.. Shell . . .. . U.S. Oonpaniea C.F.P. ,,. 41.8 394:: 1.8 87.1 PPPP %'$ 451% Ai& 100% ===a 3:% -55:35 '3a 95.9 P+lasl El2 Total Oil $ of Total 35.$ la.@ 57.7% 2.5$ lOt$ PPPP

owing to the suspension of Persian shipnenta Anerican interests controlled almst 22 rxLllion tons nom oil produced than the A.I.O.C. first The Zubair oilfield, Baara, Iraq, shipped its cargo of oil in December 1951 fron the pipeline outlet at .

Fao .

In the Kuwait/Arabia Neutrsl Zone, the Aninoil test at Fuwaris was abandoned' but plans are in hand to drill a test nearer the coast, presumably influenced by the Arauao suooess in their test at Ras Safaniya, just offshore and to the south. The Superior/Oentrol Mining concessionaround Qatar has boon surveyed but no drilling has been attempted. Eliddle East Crude Oil Priceq The intmduction towerds the end of 1950 by Socony-Vacuumof a published price list for Middle'East crude

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._

.-.-.

--11.---

.__,_

C o n ti n u a ti oTnh 0 o i l In d u s try i n 1 9 5 1

Pa g e 6

o i l s h a s .b e ofu rth o r o x to n d oddu ri n g 9 5 1 .T h es c h e d u l e s n 1 i s s u e d y S o o o nnyo wa o v e a l l th o m a i n x p o rtg ra d e o f,M i d d l e b r e s E a s t c ru d eo f w h i c h o c o ni y a p ro d u c e ri th e r d i re o tl y o r S s e e a th ro u g h u b s i d i a ri e sT h es c h e d u il s n o w s fo l l o w s ts . C ru d e i l O Ara b i a n Ira q /Z u b a i r Ira q /K i r k & Ara b i a n
Q a ta r

G ra v i tv A ,P .I. ;$ ;$
36

L o a d i nPa rt o R a e T a n u ra U m m Sa i d Fao T ri p o l i Sid o n

Pa

n e r b t& .
g l .7 5

' .>
.,

$2; $2 .

T h ep ri c e s a re th o s eg e n e ra l lpy ra c ti c e d t p re s e n t a h y a l l o th e r c o m p a n iael s o u g sho fa r n o n e a sfo l l o w e d o o o n y th h S i n a o tu a l .l p u b l i s h i n ts o w np ri c e l i s t. y ig

T h ed i ffe re n c e n p ri d e b e tw e eA r a b i a n ru d e t i n o a R a eT a n u raa n da t S i d o n s a p p a re n tlbya s e o n th e B r o k e r' s . i d A w a rd i m e h a rte r a te ru l i n g a t th e ti m e o f th e c o m m i s s i o n i n g T C R * o f T A P l i n e .. t th e e n do f 1 9 5 1 ,h o w e v e th e A w a rd a te w a s A r, R 4 7 /6 dp .d .w .t. a n da t th i s ra te , fo r b u y e rs o v i nA r a b i a n ru d e m g o to W e s te rn e s ti n a ti o n s , e S i d o n ri c e w a srrx e a ttra c ti v e th a n d th p th e R a sT a n u ra rl o e b y s o m 1 5 /- p a r to n (2 8 o e n ta /b b l ,) p e

.

(8 8 d .)l G , , C o x o n . H

C o p i e s i s s u e dto :

T h eC h a i rm a n M r. B .R . J a c k s o n S tf, S q Y .0 ,E l k i n g to n ,M M r. J .A . J s m e s o n r. R , G i l l e s p i e M r. H .E . S n o w M r. N .A . G a s 8 M r. F .G .C .M o rri s
: @ F i t: , i

D a te

2 9 th A p ri l ,1 9 5 2

. .

600
I I

MILLION

TONS

500

x
7 : -; all

WORLD CRUDE OIL PRODUCTION 1920 - 1951

A--~-.-- ---c----
35

--I-

,c

50 a